IRON CONDOR-option trading strategy

#1
Iron condor option trading strategy is a non-directional trading strategy.
I will put forth my way of trading this strategy.
I am not well versed in option trading.
I cannot employ any type of(technical/fundamental) analysis.
I cannot monitor my positions keenly.
Still I want to meddle with stock market.

Observe option chain in NSE website.
Observe which strike prices (call and put) are having maximum open interest.
Those strike prices are to be treated as resistance and support level.
These are the strike prices I will short.
To hedge my short position I will go long with a strike price 100 points away.
I will not try to employ any adjustments, if my any position goes bad.

On 27th Jan closure option chain for NIFTY Feb 1 expiry.
Call side maximum OI was for 9000 strike and for Put 8400.
So I will treat the NIFTY will oscillate between these two prices.
So I will consider 9100 Call and 8300 Put for shorting and 9200 Call and 8200 Put for hedging.

The premium for these strike is as follows:
8300 PUT 37.45
8400 PUT 54.35
9000 CALL 28.00
9100 CALL 16.80

I will get credit of 28.00 + 54.35 = 82.35
I will spend 16.80 + 37.45 = 54.25
Net credit = 82.35 - 54.25 = 28.10
This is my profit, if nifty stays between 9000-8400.
If things go wrong my maximum loss
100.00 - 28.10 = 71.90

My intention is once I am able to retain at lest 70% of my profit I will close my position.
Let us see what happens.
I will trade only in NIFTY due to its high liquidity.
I will choose strike which is 30-45 days away, because it carries adequate time value.
As time lapses the option premiums goes on reducing.
A day may come I can close my position when premium is considerably low.
I will close my entire position in one go, no legging in at any stage.

I wish to update this diary once a week.
Due to my poor knowledge I may not be able to contribute more on this.
I welcome other knowledgeable friends to explain.
But I will stick to my this trading plan.
 
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#2
The strategy looks nice. But I'm not sure if this is the correct time to enter in this strategy.
On 1st Feb, we have Budget. So, market may be really volatile. If market makes a big move in 1 day In either directions, the premiums of that direction will increase rapidly where as of other direction, it may or may not decrease in the same percentage.
So, this strategy works fine when there isn't any major event in the month. But in case, there is some event, people generally go for long strangles and long straddles.


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travi

Well-Known Member
#3
The strategy looks nice. But I'm not sure if this is the correct time to enter in this strategy.
On 1st Feb, we have Budget. So, market may be really volatile. If market makes a big move in 1 day In either directions, the premiums of that direction will increase rapidly where as of other direction, it may or may not decrease in the same percentage.
So, this strategy works fine when there isn't any major event in the month. But in case, there is some event, people generally go for long strangles and long straddles.
Sent from my iPhone using Tapatalk
:thumb: well said.

Always account put-call parity. This is what an ordinary options simulator cannot show you.
 
#5
Date:03/02/17
Closing value for my strikes:
8300 PUT 8.60
8400 PUT 14.60
9000 CALL 16.00
9100 CALL 6.60

I will trade one lot comprising of 75 shares.

INITIAL POSITION
8300 PUT BUY 75 37.45 -2808.75
8400 PUT SELL 75 54.35 4076.25
9000 CALL SELL 75 28.00 2100.00
9100 CALL BUY 75 16.80 -1260.00
NET 2107.50 A
LATEST POSITION
8300 PUT SELL 75 8.60 645.00
8400 PUT BUY 75 14.60 -1095.00
9000 CALL BUY 75 16.00 -1200.00
9100 CALL SELL 75 6.60 495.00
NET -1155.00 B
A - B 952.50
PROFIT RETENTION 45.2%
INITIAL INVESTMENT Rs. 40000/-.(Margin amount on this derivative position)
 
#6
Initial position
8300 put buy 75 37.45 -2808.75
8400 put sell 75 54.35 4076.25
9000 call sell 75 28.00 2100.00
9100 call buy 75 16.80 -1260.00
net 2107.50
latest position-10-02-2017
8300 put sell 75 3.55 266.25
8400 put buy 75 5.40 -405.00
9000 call buy 75 10.50 -787.50
9100 call sell 75 3.00 225.00
net -701.25
a - b 1406.25
profit retention 66.73
 
#7
Initial position
8300 put buy 75 37.45 -2808.75
8400 put sell 75 54.35 4076.25
9000 call sell 75 28.00 2100.00
9100 call buy 75 16.80 -1260.00
net 2107.50
latest position-10-02-2017
8300 put sell 75 3.55 266.25
8400 put buy 75 5.40 -405.00
9000 call buy 75 10.50 -787.50
9100 call sell 75 3.00 225.00
net -701.25
a - b 1406.25
profit retention 66.73
it should be 8300 put buy
1st line
 

mohan.sic

Well-Known Member
#10
Date:03/02/17
Closing value for my strikes:
8300 PUT 8.60
8400 PUT 14.60
9000 CALL 16.00
9100 CALL 6.60

I will trade one lot comprising of 75 shares.

INITIAL POSITION
8300 PUT BUY 75 37.45 -2808.75
8400 PUT SELL 75 54.35 4076.25
9000 CALL SELL 75 28.00 2100.00
9100 CALL BUY 75 16.80 -1260.00
NET 2107.50 A
LATEST POSITION
8300 PUT SELL 75 8.60 645.00
8400 PUT BUY 75 14.60 -1095.00
9000 CALL BUY 75 16.00 -1200.00
9100 CALL SELL 75 6.60 495.00
NET -1155.00 B
A - B 952.50
PROFIT RETENTION 45.2%
INITIAL INVESTMENT Rs. 40000/-.(Margin amount on this derivative position)


INITIAL POSITION
8300 PUT BUY 75 37.45 -2808.75
8400 PUT SELL 75 54.35 4076.25
9000 CALL SELL 75 28.00 2100.00
9100 CALL BUY 75 16.80 -1260.00

INITIAL INVESTMENT Rs. 40000/-.(Margin amount on this derivative position)

who is the broker...
 

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